U.S. shale production has sustained a years-long boom of rapid growth, but that appears to be coming to an end sooner rather than later. Following a mixed bag of earnings reports from shale executives, the common belief is that the growth frenzy is slowing down and coming to an end. According to World Oil, “The key challenge for producers now is to meet investors’ new focus on return of capital. This comes at a time when companies are facing a prolonged period of lower prices and when access to financing from capital markets has become difficult.”
The fall in oil prices at the end of last year combined with pressure from investors has led to a slowdown in the U.S. shale industry.
Oil prices fell more than 1% yesterday hitting 14 month lows after reports of an increase in U.S. inventories along with surging shale output.
The Bureau of Land Management, under the Department of the Interior, held a two-day auction on 142 parcels of land in New Mexico at the beginning of September. The results from this single sale has surpassed their sales numbers from all transactions in 2017 combined. The land lease sale of nearly US $1 billion will provide ample land to further boost the already growing oil production in the state.
Shale production is surging in the United States, however it’s surging into pipeline bottlenecks, creating mass delivery issues. Pipeline shortages are having a particularly frustrating effect in Oklahoma and in the Texas Permian Basin, forcing some companies to truck barrels up to 500 miles in order to get it to the gulf coast. These bottlenecks are expected to last until 2019, or even 2020, and combined with a tight labor market for drivers, there is a finite limit to the amount of crude that could be used to help stabilize the international market.